Metabolic Solutions, founded in 2006 by two former Pfizer Inc. scientists, will use its funding from the state to continue clinical testing of a new drug it's developing for type-2 diabetes.

The company last month began a clinical trial working with diabetes patients, which will "give us our first look at how the drug behaves in the disease state we're trying to treat," CEO Mark Olesnavage said.

The 21st Century Jobs Fund loan comes on top of the more than $10 million Metabolic Solutions has already raised to pursue the drug's development, Olesnavage said.

The company ultimately will require up to $100 million to take the drug to market, with the bulk of that going to a large phase-III clinical trial that leads to an application to the U.S. Food and Drug Administration around 2013.

The company's plan is to continue validating its drug, then license it out to a large pharmaceutical maker that can bring it to market, Olesnavage said. The drug has other potential applications in oncology and neurological disorders, he said.

"We believe we can create the clinical data that would make a potential pharmaceutical partner confident saying, 'Hey, that would be very helpful,' and invest," he said.

Metabolic Solutions houses its administrative office in downtown Kalamazoo and its R&D operations at the Southwest Michigan Innovation Center.

Tolera Therapeutics is developing antirejection and immune-suppression drugs based on research from the University of Kentucky and intellectual property spun out of the Cleveland Clinic.

The company, which has raised $8 million in capital, is targeting its protein-based antibody therapy at the oncology, transplant and autoimmune-disease markets.

The Jobs Fund money will enable the company to shave a year off of its development process and conduct a larger clinical trial than previously planned -- involving 50 to 60 patients -- which will make its data "more robust" when seeking FDA approval, CEO John Puisis said.

Tolera, which expects to add up to 30 jobs in the next few years, plans to take its drug to market on its own amid an estimated $50 billion future global market for protein-based therapies.

"We think there's a long runway in a huge potential market and a lot of opportunities," Puisis said.

The company hopes to reach the marketplace within four years and moved to Michigan because the state has the talent, support network and capital it needs.

"We looked at several states and decided this is the state for biotech," said Puisis, a 20-year biotech veteran.

Tolera and Metabolic Solutions were among 17 companies that shared nearly $30
million awarded last week through the state's 21st Century Jobs Fund.

The companies chosen by the Strategic Economic Investment and Commercialization Board are expected to generate 1,500 jobs in emerging industries, Gov. Jennifer Granholm said. Eleven of the 17 awards went to companies in Ann Arbor.

Mike Jandernoa, chairman of the SEIC Board and principal of Bridge Street Capital Partners in Grand Rapids, said the awards went to "the best-of-the-best proposals" that companies submitted in this round of the 21st Century Jobs Fund.